Central  Debating 
Circuit 


'  I '/ 


ANNUAL  DEBATE 


MINNESOTA 

vs. 

NEBRASKA 


CENTRAL  DEBATING  CIRCUIT 


ANNUAL  DEBATE 
MINNESOTA 

VS. 
NEBRASKA 


MINNEAPOLIS,  UNIVERSITY  CHAPEL, 
DECEMBER  31,  1907. 


3^5 


V 


o^^ 


Annual    Debate,  University    Chapel 

December    13th,  1907. 


"Resolved,  that  the  federal  government  should  have  exclusive  con- 
trol over  all  transportation  corporations  doinij  interstate  business;  con- 
stitutionality granted." 

MIXXESOTA  vs.   NEBRASKA 
First  Affirmative — Mr.  Harold  C.  Deering 

The  resolution  we  are  to  support  this  evening  reads,  "Resolved,  that 
the  federal  government  should  have  exclusive  control  over  all  transporta- 
tion corporations  doing  interstate  business,  constitutionality  granted." 
In  other  words,  we  of  the  affirmative  believe  that  all  corporations  engaged 
in  carrying  persons  and  commodities  from  <9ne  state  to  another  should  be 
controlled  exclusively  by  the  federal  government  and  not  be  controlled, 
as  they  are  today,  partly  by  the  states  and  jiartly  by  the  national  govern- 
ment. 

During  the  past  three  or  four  years,  scores  of  books  and  hundreds  of 
magazine  articles  have  been  written  deahng  with  the  transportation  prob- 
lem. Such  books  and  articles  as  these  are  written  for  just  one  purpose: — 
the  peoi)le  who  read  want  to  know  about  the  problem.  For  there  is  a 
problem.  We  have  heard  of  rebates  and  discriminations.  We  have  heard 
public  man  after  public  man  talk  about  the  railway  problem.  We  have 
seen  congress  and  the  the  several  states  pass  railway  legislation,  and  we 
have  seen  that  legislation  and  the  officers  endeavoring  to  enforce  it  en- 
joined; and.  because  of  this  injunction,  we  have  seen  states  almost  in 
arms  against  the  federal  government.  In  view  of  these  things  we  have 
come  to  know  that  there  is  a  transjjortation  problem.  We  feel  that  there 
is  somewhere  something  radically  wrong  with  the  existing  system  of  cori- 
trol.  And  as  is  alwa>  s  the  case,  this  nation-wide  feeling  that  there  is 
something  wrong  is  well  founded. 

Tonight  we  shall  endeavor  to  bring  the  i)roblem  before  you,  deter- 
mine wherein  the  existing  system  is  wrong  and  suggest  a  solution. 

The  problem  is  the  very  important  one  of  controlling  the  transporta- 
tion companies  engaged  in  interstate  commerce.  In  advocating  that 
these  interests  should  be  controlled  exclusively  by  the  federal  govern- 
ment, we  of  the  affirmative  will  endeavor  to  establish  three  things:  first, 
that  the  existing  svstem  of  control  is  inadecjuate;  second,  that  this  system 
never  can  be  rnade  adequate;  and,  third,  that  exclusive  federal  control 
alone  means  adequate  control. 

The  first  element  of  control  of  transportation  companies  is  naturally 
contrf)!  of  their  incorporation.  Let  us  then  examine  this  first  element  in 
detail. 

3 


The  gentlemen  of  the  opposition  will  doubtlessly  agree  with  us  when 
we  say  that  incor])oration  laws  must  provide  adequate  control  over  capi- 
talization, additional  stock  and  bond  issues,  and  must  insure  honest  ac- 
counting, and  full  publicity. 

Today  incorporation  is  controlled  exclusively  by  the  states.  And 
what  is  the  result?  Throughout  the  union,  state  control  of  incorporation 
is  inadequate;  so  inadequate  that  gross,  flagrant,  and  menacing  evils  are 
found  on  every  hand.  In  the  first  place,  the  transportation  companies 
are  greatlv  overcapitalized.  In  the  case  of  the  railroads,  three  states 
have  inade  careful  valuation  of  the  properties  situated  within  their  bor- 
ders. Michigan  found  lines  worth  $21,000  per  mile'capitahzed  for  $50,000. 
Wisconsin  found  lines  worth  $25  000  capitalized  for  as  much  as  $58,000. 
And  Texas  found  that  on  the  average  her  lines  were  all  capitalized  for 
two  and  one  half  times  their  actual  value.  These  three  states  have  in- 
vestigated and  found  this  to  be  the  situation.  And  La  Follette  says: 
"Were  other  states  to  investigate  they,  too,  woiild  find  the  same  over- 
capitalization." La  Follette  says:  "Of  the  thirteen  billion  dollars  for 
which  our  railroads  are  capitalized,  only  five  billions  represent  actual 
value,  the  remaining  eight  laillions  being  water."  This  then  is  the  first 
great  defect  in  the  existing  system.  State  control  of  capitalization  is 
inadequate. 

In  the  second  place,  state  control  of  additional  stock  and  bond  issues 
is  equallv  inadequate.  We  have  a  notorious  illustration  of  state  regular* 
tion  on  this  subject  last  spring  when  in  the  Harriman  investigation,  Harri- 
man  was  forced  to  tell  the  Interstate  Commerce  Commission  how  his 
syndicate  had  bought  up  the  Chicago  &  Alton,  "reorganized"  it,  added 
not  one  cent  of  actual  value,  and  then  issued  and  sold  $32,000,000  worth 
of  new  stocks  and  bonds  of  water.  That  case  is  still  fresh  in  your  minds; 
and  is  typical  of  cases  too  numerous  to  mention.  Such  cases  as  these 
establish  beyond  question  that  state  control  of  stock  and  bond  issue  is 
today  inadequate.  • 

And  finally,  state  control  of  the  other  two  phases  is  equally  inade- 
quate. Under  the  laws  of  the  states,  corporations  are  permitted  to  man 
ipulate  and  juggle  their  accounts  dishonestly  and  fraudulently.  Investi- 
gation after  investigation  by  the  Interstate  Commerce  Commission  has 
proved  that  this  evil  exists.  Again  that  Alton  case  is  tj^pical.  And, 
moreover,  since  the  states  do  not  enforce  publicity,  the  corporations  con- 
ceal their  dishonest  methods  and  practice  their  iniquity  in  safety,  free 
from  public  inspection.  W.  L.  Snyder  of  the  New  York  bar,  says:  "In 
hardly  a  state  in  the  Union  are  these  things  Controlled  as  they  should  be 
for  the  protection  of  sound  industry  and  the  public." 

I  have  shown,  then,  that  since  transportation  corporations  are  over- 
capitalized, issue  fraudulent  stocks  and  bonds,  are  dishonest  in  their  ac- 
;:ounting.  and  free  from  public  inspection,  state  control  of  incorporation 
is  today  inadequate. 

The  question  naturally  arises,  why  is  state  control  inadequate?  The 
reason  for  its  inadequacy  is  very  plain.  All  of  the  states  are  rivals  in  their 
desire  to  incorporate  as  many  companies  as  possible  for  the  revenue  de- 
rived from  such  incorporation.  This  intense  rivalry  has  caused-a  majority 
of  the  states  to  make  their  incorporation  laws  lax  for  the  purpose  of  at- 
tracting capital.  This  is  a  notorious  fact.  We  know  that  in  the  so-called 
"charter  granting"  states.  New  Jersey  and  the  dozen  or  more  like  her, 
companies  may  incorporate  to  do  business  anywhere  in  the  nation  under 
laws  which  provide  for  no  adequate  control  over  these  four  essential  mat- 
ters that  must  be  controlled  in  the  articles  of  incorporation.  Here  is  an 
illustration.  Arizfnia,  which  of  late  years,  in  company  with  Maine,  has 
become  one  of  the  chief  comjietitors  of  New  Jersey  in  the  charter  granting 
business,  has  inserted  this  advertisement  in  a  reputable  Law  Journal: 
"Incorporate  here,  no  franchise  tax;  no  limit  on  capitalization;  no  amount 


4 


of  stock  required  to  he  subscribed;  no  state  control;  no  ex.imination  of 
books;  stocks  non-assessable;  keep  office  anywhere;  do  business  anywhere." 
Think  of  it!  And  H.  L.  Wilgus  says:  "Most  of  the  great  transportation 
corporations  are  incorporated  under  the  laws  of  those  states  in  which  di- 
rectors may  provide  for  no  etTective  control  over  their  acts,  liabilities, 
capitalization,  and  operation;  and  which  allow  unbridled  effrontery, 
speculation,  peculation,  and  fraud  from  which  there  is  no  adequate 
remedy." 

This  then  is  the  situation.      Laws  that  foster  such  evil  conditions  as 
these  are  found  on  the  statute  books  of  the  majority  of  the  charter  jjrant- 
ing  states.      And  as  Dill  ])()ints  out.  because  of  the  financial  success  of  the' 
charter  granting  states,   the  number  of  states  with  such  laws  is  yearly* 
growing  larger.     These  state  laws  not  only  not  preventing  but  actually  • 
fostering  these  e\  ils,  prove  that  the  existing  system  of  state  control  of  • 
incorporation  is  utterly  inadequate.     These  evils  are  grave  and  menacing.. 
Thev  threaten  to  undefmine  the  industry  of  the  country.     They  must  be  • 
eradicated. 

Can  thev  be  eradicated  by  modifying  the  existing  system  ?  Can  state 
control  ever  be  made  adequate?  We  of  the  affirmative  believe  that  it 
cannot.  There  is  only  one  way  to  eliminate  these  evils;  and  that  is  for 
the  states  to  all  enact  uniformly  excellent  incorporation  laws.  All  the 
states,  I  sav;  not  forty-five  iorty-sixths  of  them,  but  all  of  ihcm  must  do 
this.  For  just  as  long  as  a  single  state,  such  as  Xew  Jersey,  for  instance, 
incorporates  companies  under  laws  that  provide  for  no  adequate  control 
and  gives  those  companies  power  to  do  business  anywhere  in  the  nation, 
the  good  laws  of  the  remaining  states  are  rendered  utterly  impotent  to 
check  these  evils.  The  whole  system  is  vitiated.  The  crucial  question 
then  is  will  the  states  take  such  action?  Manifestly  they  will  not.  volun- 
tarily; and  there  is  no  power  above  them  to  force  them  to  do  so.  The* 
policy  of  the  states  will  never  be  in  harmrmy.  Situation,  local  pride,  po- 
litical bias,  party  politics,  peculiar  industries,  financial  interests,  all  these 
produce  and  augment  differences,  not  harmony.  All  who  have  studied 
the  problem  agree  that  it  is  idle  to  hope  for  uniform  actifm  by  the  states. 
From  a  host  of  authorities,  let  me  quote  Dill:  "It  needs  no  argument  to 
convince  the  student  of  corporate  legislation  to  come  to  the  conclusion 
that  the  drift  of  state  legislation  is  not  toward  uniformity,  but  toward 
interstate  warfare."  The  existing  system  then  can  never  be  made  ade- 
quate. 

The  logic  of  the  situation  points  inevitably  to  one  conclusion  :  These 
evils  exist;  state  control  of  incorporation  is  inadequate;  state  control  never 
can  be  made  adequate. 

There  is,  then,  only  one  solution :  exclusive  federal  control;  and  such 
control  can  best  be  obtained  by  a  national  incorporation  law  covering 
uniformly  the  whole  country.  Under  this  law.  all  transportation  cor- 
porations desiring  to  engage  in  interstate  commerce  would  be  forced  to 
incorporate  imder  the  regulation  of  the  federal  government,  and  that  reg- 
ulation would  be  of  such  a  character  as  to  eliminate  the  evils  of  incorpora- 
tions that  exist  today.  Under  this  system,  no  longer  could  companies 
incorporate  under  the  laws  of  states  providing  for  no  adequate  control.  But 
they  would  have  to  do  business  under  the  federal  law  providing  for  uni- 
form, honest  accounting,  and  strict  ])ublicity.  They  would  ha\e  to  do 
business  under  the  federal  law  re(]uiring  all  caj)ital  stocks  and  bonds  to  be 
backed  by  actual  value  paid  in.  And  that  federal  law  would  be  enforced 
by  such  a  system  of  supervision  and  inspection  as  the  federal  law  now 
exercises  over  national  banks.  Such  a  system,  covering  unifonnly  and 
effectively  the  whole  country  would  eradicate  the  evils  of  incorporation 
that  exist  today. 

As  I  said  before,  these  evils  are  grave.  They  menace  the  industry  of 
the  nation.  They  are  one  of  the  primary  causes  for  the  ])eoj)le's  distrust, 
the  people's  feeling  that  there  is  something  wrong.     These  evils  must  be 


eradicated.  All  sound  interests  thruout  the  country  are  unified  in  the 
demand.  And  since  it  is  recognized  that  these  evils  can  never  be  eradi- 
cated as  long  as  the  states  have  conrol  of  incorporation,  these  same  sound 
interests  are"  united  in  agreeing  that  there  is  one  best  and  most  practical 
solution,  and  that  is  national  incorporation. 


First  Negative — Mr.  Cvvde  C.  McWhinxev 
Honorable  Judges,  Ladies  and  Gentlemen : 

While  we  do  not  deny  that  there  are  many  evils  which  need  to  be 
remedied,  vet  we  do  not  admit  the  general  assumption  that  these  evils  are 
inherent  in  the  present  s^^stem.  We  maintain  that  these  evils  are  not  in- 
herent; that  they  can  be  removed  and  are  being  removed  under  the  pres- 
ent system  of  partly  federal  and  partly  state  control. 

In  no  way  do  we  of  the  negative  wish  to  reflect  upon  the  work  of  the 
Interstate  Commerce  Commission,  for  we  admit  that  it  has  done  much 
excellent  work  in  controlling  the  85%  of  the  business  which  is  interstate 
business.  We  do  complain,  however,  because  the  federal  government 
did  not  sooner  give  the  Interstate  Commerce  Commission  more  power; 
and  we  favor  increasing  their  power,  and  giving  them  still  more  control 
over  interstate  commerce;  but  we  draw  the  line  at  giving  this  commission 
or  anv  other  commission  or  any  series  of  commissions  exclusive  control 
over  all  commerce  and  over  all  railroads. 

Just  what  is  the  burden  of  proof  which  rests  squarely  upon  the  af- 
firmative in  these  five  debates  this  evening?  Just  what  does  this  word 
"exclusive"  mean?  It  means  that  the  states  would  be  compelled  to  sur- 
render all  control  they  now  have  over  the  transportation  corporations 
doing  interstate  business;  that  all  the  recent  state  legislation,  no  matter 
how  good,  should  be  thro\\-n  overboard.  It  means  that  the  state  should 
no  longer  have  the  right  to  legislate  when  rates  are  exhorbitant,  when 
servicers  abominable  and  when  the  roads  are  enonnously  overcapitalized. 
It  means  that  the  states  should  no  longer  have  the  right  to  charter  new 
railroads.  In  a  word,  it  means  that  the  federal  government  should  en- 
tirelv  supplant  the  state  governments  in  controlling  railroads.  This, 
ladies  and  gentlemen,  is  the  burden  which  rests  squarely  upon  the  affirm- 
ative when'it  proposes  that  the  federal  government  should  have  exclusive 
control  over  all  transportation  corporations  doing  an  interstate  business. 

Now  just  what  is  this  debate  about?  Simply  this:  Since  the  federal 
government  under  the  constitution  already  has  exclusive  control  over  all 
interstate  business,  the  issue  tonight  is  simply  this:  "Who  shall  control 
the  intrastate  business  and  who  shall  control  these  local  railroad  problems? 

Our  opponents  have  harped  upon  the  present  over-capitalization, 
insisting  that  the  states  cannot  prevent  over-capitaUzation.  Upon  this 
one  point  they  have  based  their  whole  first  speech.  For  the  sake  of  argu- 
ment, we  adrnit  that  there  should  be  national  incorporation,  but  this  does 
not  necessarily  mean  exclusive  federal  control.  This  is  advocated  by 
many  of  our  foremost  thinkers  who  still  favor  dual  control.  The  presi- 
dent' favors  a  national  incorporation  law.  yet  in  his  recent  message  to 
congress  he  says:  "There  will  still  be  enough  left  for  each  of  the  state 
commissions  to  do."  Will  our  opponents  demand  that  we  abolish  these 
state  ligislatures  in  order  to  get  capitalization  regulated,  when  we  admit 
that  there  should  be  a  uniform  incorporation  law,  and  that  it  should  be 
in  the  form  of  a  national  incorporation  law? 

Now,  before  considering  the  evils  of  the  existing  svstem,  it  is  neces- 
sarv  to  corisider  the  principles.  We  maintain  that  exclusive  federal  con- 
trol should  not  be  extended  over  local  business.  For  several  reasons  it 
should  not.  And  the  first  and  fvindamental  reason  is  this:  That  such  an 
extension^of  federal'power  is  contrary  to  the  fundamental  principle  of  our 


gavemment.  our  democracy,  dual  jjovemment.  Our  democracy  is  based 
upon  the  principle  of  developing;  the  local  unit.  It  is  a  yiovemment  where 
the  power  emanates  from  the  peo])le;  where  each  locality  controls  its  local 
problems  and  empowers  the  federal  <rovernment  to  regulate  only  those 
things  which  are  not  local.  The  distinctive  merit  of  our  federal  form  of 
dual  control  is  that  we  delegate  to  the  federal  government  such  problems 
as  long  haul,  discrimination,  rebates,  etc..  and  reserve  to  the  states  the 
right  to  control  the  problem  of  local  rates  and  service.  But  the  aHimi- 
ative  pro]'Oses  to  centralize  this  control,  take  it  away  from  the  states  and 
place  it  in  the  hands  of  the  national  government.  Al!  of  our  great  states- 
men ha\'e  declared  that  the  strength  of  our  country  is  due  to  this  dual 
form  of  government,  but  our  opponents  would  have  us  abandon  the  whole 
past  and  ride  rough  shod  over  the  fundamental  principles  of  democracy. 
Therefore  we  maintain  that  the  state  and  not  the  federal  government 
should  control  local  rates  and  service  for  the  sim])le  reason  that  precedent 
and  princijile  direct  us  to  have  control  of  k)cal  problems  local. 

Not  only  is  this  affirmative  i)lan  wrong  in  princij)le  l)ut  it  is  also  in- 
expedient. First,  because  it  destroys  state  legislati'i"  which  originates 
iriost  of  the  re''orms  o*"  nilroad  control.  We  find  that  the  several  states 
will  pass  different  laws.  If  the  law  in  practice  proves  a  good  one.  it  is 
adopted  by  other  states;  it  expands  and  finally  works  it.self  into  the  nation- 
al legislature  while  if  it  is  bad  it  is  discardetl.  Iiaving  worked  harm  only  to 
the  small  section  of  the  country.  Many  of  the  best  reforms  have  originated 
with  these  state  legislatures;  for  instance,  the  anti-pass  law,  the  anti-re- 
bate law  the  two-  cent  fare,  etc.  We  now  have  forty-six  different  legis- 
latures working  out  good  laws  regarding  the  regulation  of  railroads  while 
under  your  svstem  vou  will  have  merely  one.  Wiiich  is  better,  ladies  and 
gentlemen,  one  experimental  center  or  forty-six? 

In  the  second  place  it  is  inexpedient,  because  it  would  take  control 
awav  from  the  people.  The  smaller  the  area,  the  more  influence  the  peo- 
ple have  over  the  commission.  Where  there  is  merely  one  commission 
for  the  whole  countrv  the  people  will  have  very  little  influence.  Possibly 
the  affirmative  proposes  to  have  s'lb-commissions  scattered  thruout  the 
countrv  to  attend  to  these  local  ])roblems.  But  these  commissions  would 
have  to  be  merelv  advisory.  They  are  responsible  to  the  central  commis- 
sion at  Washington,  and  it  responsible  to  congress.  Hence  the  people 
have  no  direct  voice.  The  only  inflnence  the  people  could  have  would  be 
thru  congress.  This  is  very  indirect.  And  in  case  the  sub-commission 
is  appointed  to  a  certain  locality,  what  influence  can  the  peojjle  have  over 
it?  How  can  the  people  have  it  dismissed  if  it  happens  to  be  a  corrupt 
commission  which  responds  to  the  wishes  of  the  railroads  rather  than  to 
the  wishes  of  the  people i*  But  the  affirmative  believes  in  government  at 
long-range  rather  than  government  close  at  home.  It  believes  that  the 
people  should  be  subject  to  the  commission,  not  masters.  Take  their 
radical  step  and  vou  mark  the  beginning  of  the  end  of  our  dual  system  of 
government.  Is  government  by  the  people  a  failure?  Thcre'"ore  the 
affirmative  plan  is  inexpedient,  since  history  and  experience  demonstrate 
bevond  debate  that  a  democratic  government  if  it  be  democratic  must 
leave  local  problems  under  local  control,  and  keey)  the  government  close 
to  the  people. 

Therefore,  in  conclusion,  ladies  and  gentlemen,  this  radical  lean  in 
the  dark  is  not  to  be  thought  of  unless  the  affirmative  can  show  that  there 
is  enough  good  to  be  derived  from  their  centralization  to  justify  violating 
the  fundamental  principles  of  our  government  by  overthrowing  our  fed- 
eral fonn  of  dual  control;  to  justifv  taking  the  control  out  of  the  hands  of 
the  people;  and  to  justify  depriving  the  .state  legislatures  of  all  control 
over  intrastate  business.  "  This,  so  far,  thev  have  utterly  failed  to  do. 


Second  Affirmative — Mr.  Algernon  O.  Colburn 
Honorable  Jvidges,  Ladies  and  Gentlemen: 

There  are  two  problems  before  the  people  today  in  respect  to  trans- 
portation corporations;  they  are  the  question  of  incorporation  and  the 
question  of  rate  regulation.  The  gentlemen  have  conceded  the  question 
of  incorporation.  This  problem  and  the  problem  of  rate  regulation  are 
essentiallv  the  same;  so  nearly  the  same  that  it  may  be  well  first  to  review 
the  arguments  of  m}?  colleague  with  respect  to  the  matter  of  incorpora- 
tion. My  colleague  showed  you  that  the  present  system  of  control  of 
incorporation  is  inadequate  because  the  states  control  incorporation  with 
an  eye  solely  to  their  own  narrow  interests.  In  their  eagerness  to  get  fat 
incorporation  fees  many  states  allow  the  transportation  corporations  to 
issue  watered  stock,  juggle  their  accounts,  and  keep  them  hidden  from 
the  public. 

Secondly,  my  colleague  showed  you  that  the  present  system  of  in- 
corporation never  can  be.  made  adequate.  The  remedy  for  the  evil  is 
obviously  some  uniform  policy  covering  the  entire  country.  My  col- 
league showed  that  the  states  never  have  and  never  will  agree  voluntarily 
upon  a  policy  covering  the  whole  country.  Under  the  present  system 
there  is  no  power  to  force  them  to  an  agreement. 

Thirdly,  my  colleague  showed  that  only  by  exclusive  federal  control 
on  incorporation  can  adequate  control  be  secured.  Exclusive  federal  con- 
trol is  the  only  means  by  which  harmonious  action  can  be  brought  about. 
Let  us  now  see  if  the  evil  of  rate  regulation  is  not,  in  its  last  analysis, 
the  same  as  that  of  incorporation. 

That  we  have  a  problem  of  rate  regulation  in  the  United  States  today, 
everybody  will  admit.  The  thirteen  or  more  rate  suits  now  pending  be- 
fore the  federal  courts  in  various  parts  of  the  country  bear  evidence  that 
there  is  a  problem.  Hundreds  of  newspaper  and  magazine  articles  on  the 
rate  question  also  convince  us  that  there  is  something  wrong.  It  was 
thirty-five  years  ago  that  the  problem  Of  rate  regulation  first  arose.  The 
problem  has  grown  in  seriousness  ever  since.  Formerly,  competition  be- 
tween transpiortation  corporations  and  small  suits  in  local  courts  solved 
most  of  the  problems.  It  is  not  so  today.  Recently  in  North  Carolina 
state  and  federal  authorities  almost  came  to  a  clash  of  arms  over  the 
question  of  rate  regulation.  The  transportation  corporations  are  today 
so  consolidated  that  a  coterie  of  seven  or  eight  men  control  practically  all 
of  the  transportation  systems.  This  power  could  crush  any  single  state 
that  seriously  opposed  it.  These  facts  show  how  serious  the  problem  has 
become.      Thirty-five  years  of  dual  control  has  left  us  here. 

The  cause  of  this  problem  of  rate  regulation  is  the  same  as  that  of 
incorporation;  the  failure  of  the  states  in  their  eagerness  to  satisfy  the 
demands  of  local  interests  to  recognize  the  rights  of  other  states.  To 
solve  this  problem,  we  propose  exclusive  federal  control  of  rates,  because 
(1)  the  present  system  of  rate  control  is  inadequate.  (2)  it  can  never  be 
made  adequate.  (3)  exclusive  federal  control  alone  will  give  adequate  con- 
trol. 

The  present  system  is  inadequate  because  the  states  base  their  action 
upon  the  assumption  that  rates  solely  between  points  within  a  state,  as 
between  Minneapolis  and  Duluth,  are  merely  local  in  effect.  They  are 
not  local  in  their  effect  however,  but  affect  other  states.  The  Report  of 
the  National  Convention  of  State  Railroad  Commissioners  says:  "It  is 
well  known  that  a  change  in  rates  to  one  central  locality  often  requires 
changes  in  rates  to  hundreds  of  points,  and  even  to  localities  far  removed 
from  the  point  originally  affected.  And  so  it  has  come  to  be  almost 
axiomatic  that  cutting  rates  to  a  central  point  like  Savannah.  Georgia,  to 
Atlanta  in  the  same  state  will  ultimately  affect  a  point  like  Chicago." 


From  these  facts  the  same  Convention  of  Railroad  Commissioners 
arrived  at  the  following  conclusions:  "The  railroads  of  the  country 
should  not  be  divided  by  state  lines  but  should  be  regarded  in  their  en- 
tirety and  treated  as  a  single  system  for  all  ]>uri)oses  of  rate  regulation." 
Judge  Canty  of  Minnesota  on  the  same  point  says:  "There  is  no  good 
reason  why  raflroads  should  be  divided  on  state  lines  at  all  for  the  purpose 
of  rate  regulation." 

The  making  of  rates,  therefore,  even  between  points  within  a  state, 
is  not  a  local  matter,  but  a  matter  which  affects  other  states  as  well. 

Secondly,  the  present  system  of  rate  regulation  results  in  useless  con- 
flict between  state  and  federal  authority.  All  who  have  read  the  news- 
papers know  that  the  recent  attempts  by  the  states  to  regulate  rates  have 
been  suspended  by  the  federal  courts.  In  North  Carolina  this  conflict 
between  state  and  federal  authority  almost  resulted  in  civil  war.  The 
situation  is  similar  in  Minnesota,  Missouri.  Pennsylvania,  Virginia.  Missis- 
sippi, Ohio.  Kansas,  and  other  states.  Here  is  what  a  committee  of  the 
National  Convention  of  State  Railroad  Commissioners  says  on  this  point: 
"Under  the  present  system  the  le.gislature  can  fix  rates,  but  in  almost^ 
everv  case  it  remains  for  the  federal  courts  to  enforce  them."  So  that 
todav  in  the  last  analysis  state  rates  are  made  by  federal  authority.  The 
present  svstem  merely  delays  its  action.  Again  wc  see  that  the  regulation 
of  rates  within  the  borders  of  a  state  is  not  local  merely  in  etfect,  but  ex- 
tends beyond  the  borders  of  the  state  to  such  an  extent  that  federal  au- 
thoritv  is  forced  to  interfere. 

Thirdlv,  the  present  system  of  rate  regulation  is  inadequate  because 
the  attemy)ts  of  the  states  to  satisfy  the  demands  of  local  interests  results 
in  conflicts  between  a  state  and  its  neighboring  states.  State  railroad 
commissioner,  as  a  rule,  discriminate  in  favor  of  their  own  shippers  and 
discourage  tre  shippers  of  other  states.  It  is  but  natural  for  the  states  to 
do  this.  Thev  mav  see  the  iniustice  of  it  themselves,  but  they  must  obey 
the  commands  of  their  constituents,  the  ship]x>rs  of  the  state. 

The  methods  of  this  discrimination  are  various.  It  is  accomplished 
by  shifting  classification  for  ditferent  kinds  of  goods,  by  reciprocal  de- 
niurrage  laws,  by  granting  switching  rights,  by  regulating  terminal  facil- 
ities, by  allowing  rebates,  by  underbilling,  by  allowing  fictitious  claims. 
We  have  time  to  mcntifm  but  a  single  instance  out  of  the  many,  illustrat- 
ing the  manner  of  this  discrimination  by  the  states.  A  Minnesota  in- 
vestigating committee  in  1902  found  that  railways  in  Minnesota  were  al- 
lowing an  enormous  sum  in  rebates  on  state  traffic.  They  dropped  the 
investigation  at  the  demand  of  the  shippers  who  were  getting  an  advant- 
age over  the  shippers  of  nei,ghborin.g  states. 

Mr  Dixon  in  his  work  on  state  regulation  of  railroads  shows  numerous 
other  instances  of  state  discrimination.  He  then  sums  up  the  whole  mat- 
ter by  savin.g:  "Many  Commissions  have  been'unwilling  to  look  at  the 
railroad  question  in  a  broad  minded  spirit.  They  partake  of  the  prejudices 
of  their  constituencies  and  promote  the  schemes  of  the  shippers  of  their 
communities."  So  we  see  in  another  way  that  local  rate  re.gulation  affects 
not  only  the  state  where  the  rate  is  in  effect,  but  affects  the  shippers  of 
neighboring  states  as  well.  This  narrow  ])olicy  of  each  state  for  itself  and 
the  devil  take  the  weakest,  naturally  results  in  discord  and  retaliatory 
legislation.  It  is  just  this  narrow  policy,  inseparable  from  state  action 
that  will  always  prevent  state  re.gulation  of  rates  from  being  effective. 

The  present  system  of  rate  regulation  is  inadequate,  therefore,  for  the 
same  reason  that  the  present  system  of  control  fif  incor|)orati<)n  is  inade- 
quate, namely,  the  failure  by  the  states  to  recognize  the  ri.ghts  and  in- 
terests of  neighboring  states.  Now  the  question  naturally  arises,  can  the 
present  system  ever  be  made  adequate?  Obviously  the  states  should 
come  to  some  agreement  on  the  question  of  rate  regulation.  .\  uniform 
policy  should  be  adojjted  as  in  the  case  of  incorporation.  The  states 
never  have  agreed  upon  a  uniform  policy.     They  have  had  thirty-five 

9 


vears  to  come  to  an  asfreement,  but  have  failed  to  do  so.  They  show  no 
disposition  at  the  i)resent  time  to  a.t^ree.  Under  the  present  arrangement 
there  is  no  power  that  can  force  them  to  an  agreement. 

Exckisive  federal  control  of  rate  regulation  is  the  only  means  of  ade- 
quately regulating  rates  and  solving  the  problem.  Exclusive  federal  con- 
trol is  the  only  means  by  which  interstate  warfare  over  incorporation  can 
be  stopped.  It  is  the  same  with  respect  to  the  interstate  warfare  over 
rate  regulation. 

Under  exclusive  federal  control  there  would  be  but  one  master  over 
the  transportation  corporations.  These  companies  could  not  as  now  play 
one  master  against  the  other  and  postpone  control.  According  to  the 
State  Railway  Commissioners  themselves  exclusive  federal  control  of  rates 
alone  means  adequate  control. 

The  Convention  of  Railway  Commissioners  have  made  the  following 
recommendations:  (1)  That  the  federal  government  assume  exclusive 
control  of  classification  of  freight  and  put  into  effect  a  single  system  which 
would  applv  alike  to  both  state  and  interstate  traffic.  (2)  That  a  uni- 
fonn  svstem  of  accounting  covering  both  state  and  interstate  business 
should  be  put  into  effect  by  the  federal  government.  (8)  That  the  state 
commissions  be  made  the  agents  of  the  federal  commission.  (4)  And 
A.  K.  Tiesberg  of  the  Minnesota  Railway  Commission,  after  studying  the 
problem  for  twenty  years,  reported  to  the  convention:  "If  the  Railway 
Commissions  of  the  various  states  undertook  a  thorough  investigation  of 
making  rate  schedules,  they  would  come  to  the  conclusion  that  some 
uniform  method  covering  both  state  and  interstate  traffic  was  necessary." 

Now,  if  these  recommendations  of  the  State  Commissioners  the  men 
who  know  best  the  merits  and  demerits  of  the  negative's  sj'stem.  should 
be  put  into  force  what  effective  means  of  rate  regulation  would  be  left  to 
the  states?  Can  the  negative  point  to  an  effective  nieans  of  regulation 
that  would  be  left?  Can  thev  name  a  reason  why  the  recommendations 
of  these  officials  should  not  be  adopted? 

But  the  question  is  would  the  federal  government  regulate  more 
effectivelv  than  the  states?  The  federal  government  now  regulates  inter- 
state rates  over  eightv-five  per  cent  of  the  business  better  than  the  states 
do  with  respect  to  the  remaining  fifteen  per  cent.  Congress  has  passed  a 
law  making  rebates  unlawful.  It  has  punished  Standard  Oil  the  Grain 
Trust  the  railroads,  the  big  packers,  and  large  shippers  of  all  kinds  for 
violating  this  law.  Fifteen  states  according  to  Judson,  have  no  anti- 
rebate  laws,  As  manv  niore,  like  Minnesota,  make  no  attempt  to  enforce 
theirs. 

Now  let  us  sum  up  the  case  for  the  affirmative  so  far  in  this  debate. 
We  have  shown  vou  that  the  federal  government  should  have  exclusive 
power  to  regulate  rates  and  incorporation.  (1)  Because  the  present 
system  is  inadev[uate.  It  has  resulted  in  interstate  warfare,  as  Dill  savs. 
(2)  Because  the  present  svstem  never  can  be  made  adequate.  The 
states  regulate  with  a  view  solelv  to  their  own  selfish  interests;  disregard- 
ing the  facts  that  anv  action  which  they  take  will  have  the  effect  of  hurt- 
ing other  states.  No  regulation  is  merely  local  in  its  effect.  (3)  Be- 
cause federal  control  alone  means  adequate  control.  All  unbiased  opinion 
favors  it  is  the  only  means  of  bringing  the  states  together. 


Second  Neg.ative — Mr,  L.\wrexce  J.  We.aver 

Mr.  Chairman,  Ladies  and  Gentlemen: 

Thus  far  the  opposition  have  based  their  whole  case  upon  the  as- 
sumption that  this  is  a  question  of  who  should  control  the  whole  railroad 
business,  but.  as  mv  colleague  has  shown  vou,  the  control  of  interstate 
comtnerce  is  settled  for  once  and  all  time.  The  United  States  constitution 
made  y)rovision  at  the  time  of  its  adoption  that  the  federal  government 

10 


should  control  all  commerce  that  passes  between  states.  Therefore,  the 
question  th's  e\'enint;  is  not  who  shall  ctmtrol  interstate  commerce,  but  it 
is  solelv  a  question  of  who  shall  control  the  intrastate  commerce  and 
hence  our  whole  case  rests  upon  the  sound  ])rinci|)le  of  our  whole  j^ovem- 
ment  that  national  ])roblems  sliould  be  settled  by  the  national  go\'em- 
ment  and  state  problems  should  always  be  settled  by  the  state  govern- 
ments. 

The  gentleman  who  has  just  preceded  me  repeated  the  argument  in 
favor  of  a  national  incorporation  law.  while  my  worthy  colleague  showed 
you  that  we  ])lainly  favor  a  national  incorporation  law  and  we  believe  that 
it  is  the  onlv  wav  in  which  to  solve  tliat  problem.  Again  the  gentleman 
savs  that  we  cannot  etViciently  Kviilcite  rates  unless  we  have  a  uniform 
law,  but.  ladies  and  gentlemen,  do  we  want  a  uniform  law?  Are  the  con- 
ditions in  all  forty-six  states  of  this  Union  sucJi  that  we  can  have  a  uni- 
form law,  the  same  law  applicable  to  the  Rocky  Mountains  of  Colorado 
as  to  the  prairies  of  Minnesota  or  Nebraska?  Ladies  and  gentlemen,  the 
affirmative  argument  is  inconsistent.  We  do  not  believe  that  you  can 
regulate  rates  in  this  way  and  furthermore  that  tlu-y  can  ])ut  their  jilan 
in  operation. 

Two  speakers  this  evening  have  shown  you  the  merits  of  exclusive 
federal  control.  So  far  thev  have  not.  and  they  must  in  order  to  win  this 
debate  give  us  a  plan  which  is  definite  and  they  must  show  that  congress 
will  favor  the  plans  which  they  advocate. 

Now.  ladies  and  gentlemen,  not  only  is  exclusive  federal  control  of 
intrastate  commerce  directly  contrary  to  the  fundamental  j)rinciples  of 
a  democratic  government  and  also  inexpedient  because  it  will  kill  local 
experimentations  and  means  long  range  government  by  commission,  but 
we  shall  further  show  that  exclusive  federal  c(jntrol  is  inexpedient  l)ecause 
it  woul  1  increase  corruj)ti<m  in  our  national  government.  It  would  in- 
crease corruption  because  the  railroads  would  have  but  one  body  of  legis- 
lators to  corrupt  and  one  president  to  elect  instead  f)f  forty-six  governors. 
Their  corrupt  influence  would  be  increased  just  in  proportion  as  they 
centralize  their  strength. 

Whv,  we  ask  the  opposition,  do  the  railroads  want  exclusive  federal 
control?  At  a  meeting  of  the  national  ('i\ic  I'ederation  at  Chicago.  ])resi- 
dents  of  five  of  the  largest  railroads  strongly  urged  the  change  from  state 
and  federal  control  to  federal  control  alone.  Have  they  always  been  such 
ardent  supporters  of  federal  control?  Xo.  Less  than  two  vears  ago, 
when  an  attempt  was  made  to  increase  the  powers  of  the  commission,  the 
crv  of  the  railroads  was  for  state  control  but  when  the  states  begin  to  turn 
the  screws  of  legislation  upon  them  thev  cry  even  louder  for  federal  con- 
trol. 

Exclusive  federal  control  will  increase  corruy)tion.  Secondly,  be- 
cause it  would  create  a  great  political  machine.  Tlie  new  j>lan  would 
necessitate  the  aj)pointment  of  an  army  of  officials.  To  control  the  ap- 
pointment of  those  men,  and  weaken  the  commission  bv  securing  the  ap- 
pointment of  men  servile  to  railroad  interests  would  mean  wholesale 
corruption. 

Again,  their  plan  would  increase  corruption  because  government  by 
commission  will  kill  the  people's  interest  in  the  problem,  which  is  our  sole 
assurance  of  clean  government,  state  and  national.  But  how  are  you 
going  to  discover  corruy^tion  when  it  is  out  of  your  sight.'  .And  if  your 
railroad  commissioner  is  corrupt  how  can  you  remove  him  from  olhce? 
when  instead  of  being  responsible  to  vou  for  his  re-election  he  is  responsi- 
ble to  the  national  government?  Oti  the  other  hand,  under  the  dual  sys- 
tem of  government,  if  your  railroad  commissiijner  is  corrujit  you  soon  find 
it  out.  and  vou  can  put  him  out  of  office. 

Recall  the  historv  of  the  enactment  of  the  interstate  comrrterce  law. 
The  records  of  congress  show  how.  year  after  year,  bef'ore  its  passage,  there 
was  a   wholesale  distribution   of  annual   passes.      When   the  law   finally 

11 


passed,  the  railroad  lobbyists  fixed  it  so  that  its  provisions  were  almost 
harmless.  Soon  they  resumed  the  practices  which  the  act  was  supposed 
to  prohibit.  The  railroads  again  gave  x>asses  and  discriminated.  But 
the  commission  soon  found  out  and  in  1897  asked  congress  for  more  power. 
Year  after  year  it  called  on  congress  for  more  power,  and  year  after  year 
congress  ignored  them.  Nine  years  the  railroad  lobby  blocked  it.  There- 
fore, because  exclusive  federal  control  will  kill  local  experimentation,  be- 
cause it  means  long  range  government  by  commission  instead  of  honie 
made  goveminent,  and  for  the  additional  reason  that  it  would  increase 
political  corruption  by  centralizing  the  point  of  attack,  by  creating  a 
political  machine  and  killing  the  interests  of  the  people,  the  affirmative 
plan  is  inexpedient. 

Furthermore,  exclusive  federal  control  is  economically  inexpedient. 
Authorities  place  the  value  of  our  railroads  at  thirteen  billions  dollars. 
They  represent  practically  one-third  of  the  wealth  of  our  country.  They 
have  contributed  more  to  the  upbuilding  of  the  great  west  than  any 
other  industry,  and  today  nearly  all  industry  of  this  countrv  depends 
upon  them.  Remember  these  facts  when  you  consider  the  expediency 
of  transferring  the  control  of  intrastate  business  to  the  federal  govern- 
ment. 

To  upset  the  operations  of  the  railroads  means  a  possible  upheaval 
in  industrial  conditions.  What  control  will  the  affirmative  have  over 
transportation  corporations  between  the  time  when  the  right  to  regulate 
is  taken  from  the  states  and  the  time  when  congress  adopts  a  plan  such 
as  the  affirmative  favors.  Will  they  let  the  railroads  operate  free  from 
the  restricting  hand  of  the  law,  or  do  they  propose  to  put  their  plans 
into  operation  at  once? 

Whatever  action  taken  against  the  railroads  disturbs  the  equilibri- 
um of  transportation  and  is  going  to  be  a  terrible  blow  to  every  individ- 
ual. The  prices  of  all  commodities  are  based  upon  rates  to  a  great  ex- 
tent and  therefore  to  make  a  uniform  rate  will  be  to  change  the  price  of 
everything  you  eat  and  wear. 

The  affirinative  has  harped  a  great  deal  upon  the  evil  of  discrimina- 
tion in  favor  of  certain  cities,  saying  that  the  railroads  now  "favor  large 
centers  to  the  detriment  of  the  smaller  towns.  They  have  urged  their 
system  saying  that  it  can  alone  stop  this  evil.  But  how?  They  say 
state  regulation  of  intrastate  rates  won't  prevent  it  and  the  interstate 
commerce  commission  now  regulates  interstate  rates  yet  the  affirmative 
argues  that  this  is  not  enough.  If  these  powers  combined  under  dual 
control  won't  stop  place  discrimination  then  there  is  only  one  way  which 
the  affimiative  can  favor  as  their  remedy.  Federal  rate  making.  In 
urging  federal  rate  making  the  affirmative  stands  alone.  We  ask  them 
to  produce  a  single  authority  who  has  ever  for  one  moment  considered 
federal  rate  making  anything  but  folly. 

And  furthermore  if  you  choose  exclusive  federal  control  of  the  great- 
est industry  of  this  country,  where  are  you  going  to  draw  the  line?  The 
railroad  corporation  is  by  no  means  the  only  one  that  needs  to  be  con- 
trolled. They  are  not  the  only  corporations  which  are  violating  the 
laws  of  the  American  people.  You  can  see  how  unfair  it  would  be  to 
take  over  the  exclusive  control  of  all  transportation  corporations,  and 
allow  these  others  to  continue  uncontrolled.  In  short,  adopt  your  plan 
and  you  will  establish  a  dangerous  precedent  that  tends  toward  national 
control  of  every  industry  until  we  as  states  will  be  but  geographical 
divisions  only  distinguished  by  imaginary  boundaries. 

In  conclusion,  ladies  and  gentlemen,  jvist  what  have  the  negative 
proved  this  evening?  First,  exclusive  federal  control  of  intrastate  com- 
merce is  directlv  contrary  to  the  fundamental  principles  of  a  democratic 
government.  Secondlv,  exclusive  federal  control  is  inexpedient  because 
it  absolutely  kills  local  experimentation;  because  it  means  the  substitu- 
tion of  long  range  government  bv  commission  for  home  made  government 

12 


by  the  people:  and  further  because  its  adoption  will  increase  political 
corruption  in  our  national  government  by  centralizing  the  point  of  at- 
tack, by  creating  a  great  political  machine  and  killing  the  peoj)le's  in- 
terest in  this  problem.     And  finally  it  is  economically  inexpedient. 


Third  Affirmative — Mr.  Siam.ky  R.  Houck 
Honorable  Judges,  Ladies  and  Gentlemen: 

My  colleagues  have  shown  that  the  present  svsteni  of  control  of 
transportation  corporations  isn't  and  can't  be  made  adequate  and  ex- 
clusive federal  control  alone  will  be  adequate.  My  first  colleague  showed 
that  control  of  incorporation,  which  includes  the  question  of  capitaliza- 
tion, future  stock  and  bond  issties,  accounting,  and  publicitv.  isn't  todav 
adequate  and  can't  be  made  adequate  under  the  existing  system.  Ivx- 
clusive  federal  control  alone  will  be  adequate.  Mv  second  colleague 
showed  that  the  existing  dual  svstem  of  rate  control  isn't  and  can't  be 
made  adequate.  He  showed  that  all  rates  whether  state  or  interstate 
are  interdependent  and  are  interstate,  not  local  in  effect;  that  the  states 
discriminate  in  favor  of  their  own  shipjiors  at  the  expense  of  the  shii)y)ers 
of  other  states,  and  that  as  a  result  there  is  conflict,  warfare  between 
state  and  state  and  state,  and  nation. 

Before  I  go  into  the  argument  of  the  gentlemen  in  detail  let  me 
clear  away  some  misapprehensions  of  the  gentlemen  of  the  negative. 
The  gentleman  preceding  me  declared  that  the  atlirmative  were  talking 
solely  about  interstate  commerce.  The  gentleman  is  mistaken:  the 
second  speaker  on  the  affirmative  spent  his  whole  time  showing  that  the 
existing  system  of  controlling  intrastate  rates  was  inadequate.  He 
showed  that  even  state  rates  were  interstate  and  not  local  in  their  effect, 
and  that  this  situation  resulted  in  discriminations  in  favor  of  the  ship- 
pers of  one  state  against  tlie  shippers  of  neighboring  states,  and  that 
as  a  result  there  was  conflict  between  state  and  state  and  between  state 
and  nation.  He  showed  that  for  these- reasons  even  state  commerce 
should  be  controlled  by  the  federal  government.  Moreover,  a  thing  the 
gentleman  entirely  ignored,  my  colleague  quoted  as  his  authority  for 
practically  every  point  he  made  the  State  Railroad  Commissioners,  the 
men  who  are  trying  to  make  the  present  system  a  success. 

The  gentlemen  also  declared  tliat  when  the  affirmative  stands  for 
uniform  control  it  stands  for  the  same  rate  in  every  locality  of  the  coun- 
try. The  same  in  Maine,  California,  Mississippi,  and  Minnesota.  The 
affirmative  no  more  means  that  than  the  present  federal  rate  law,  an  ab- 
solutely uniform  rate  law  means  such  a  thing.  The  present  federal  rate 
law  as  would  the  plan  of  the  affirmative  will  secure  a  uniformly  reason- 
able and  just  law  all  over  the  country:  and  as  to  what  is  just  and  reason- 
able can  be  determined  only  as  the  gentlemen  declare,  by  local  conditions. 

The  first  speaker  of  the  negative  at  the  very  outset  conceded  three 
very  vital  things:  He  conceded  that  we  must  have  exclusive  federal 
control  of  incorporation  in  order  to  remove  the  evils  of  incorjioration: 
they  conceded  the  truth  of  our  statement  that  859^  of  the  total  trans- 
portation business  is  interstate  business  and  exclusively  controlled  by 
congress,  finally  thev  conceded  that  the  control  by  congress  over  this 
85%,  six-sevenths  of  the  entire  business,  was  adequate  today  when  they 
declared  that  they  thought  the  interstate  commerce  crnnmission  was  an 
excellent  body,  and  that  they  had  no  fault  to  find  with  it  except  that  in 
accord  with  our  views  it  should  have  its  jjowers  increased. 

What  is  the  effect  of  these  concessions  by  the  gentlemen  upon  their 
own  argument?  First  take  the  concession  that,  agreeing  with  us  they 
want  exclusive  federal  incorporation.  This  concession  means  three 
things:     The  gentlemen  first  admit  every  evil  charged  against  the  exist- 

13 


ing  state  system  of  incorporation.  Second,  they  admit  that  the  states 
can't  remove  those  evils.  Third,  that  the  federal  government  alone  can 
adequately  control  incorporation.  But  that  isn't  all  the  gentlemen  have 
done  by  this  concession.  The  instant  they  conceded  these  things  with 
respect  to  incorporation  they  shouldered  the  burden  of  showing  that  the 
state  is  not  equally  inefficient  and  the  federal  government  equalh"  effi- 
cient in  reinoving  every  other  of  the  evils  which  we  charged  to  exist  in 
the  present  system,  particularly  the  evils  of  the  existing  system  of  rates. 
For  if  the  gentlemen  admit  that  the  states  are  a  failure  today  in  the 
matter  of  incorporation  and  the  federal  government,  in  the  gentlemen's 
opinion,  a  success,  is  not  that  concession  the  very  strongest  evidence 
that  the  same  thing  is  true  of  every  other  existing  evil  under  the  dual 
system  of  today?  At  least  this  is  true  luitil  the  gentlemen  show  that  it 
isn't. 

The  gentlemen  of  Nebraska  made  a  serious  mistake  when  they  con- 
ceded incorporation  and  attacked  exclusive  federal  control  of  rates  as 
laid  down  by  my  colleague.  For  the  question  of  incorporation  and  the 
question  of  rates  go  hand  in  hand,  are  interdependent  and  cannot  be  sep- 
arated. When  they  conceded  the  first  they  conceded  the  second.  To 
show^  this  let  me  show  yoii  what  my  collea,gue  did  and  what  the  gentle- 
men of  the  negative  conceded  when  they  conceded  incorporation.  When 
my  colleague  showed  and  the  negative  conceded  that  the  present  state 
system  of  incorporation  was  inadequate  and  that  federal  control  alone 
would  give  adequate  control  he  showed  and  the  gentlemen  conceded 
that  control  of  capitalization  future  stock  and  bond  issues,  accounting 
and  publicity  wasn't  and  couldn't  he  made  adequate  today  and  that  ex- 
clusive federal  control  alone  would  be  adequate. 

In  other  words  they  conceded  to  the  federal  government  the  four 
vitally  essential  and  absolutely  necessary  things  for  the  adequate  control 
of  rates.  We  ask  the  gentlemen  how  anyone  can  adequately  control 
rates  unless  he  know's  the  value  of  the  property  upon  which  it  is  just 
that  rates  be  paid?  How  can  he  know  that  tmless  he  knows  that  there 
is  no  overcapitalization,  and  no  future  fradulent  stock  and  bond  issues 
as  in  the  Alton  case  my  colleague  mentioned?  How  can  rates  be  con- 
trolled adequately  unless  one  knows  what  the  receipts  and  expenditures 
of  the  transportation  corporation  actually  are?  How  can  you  know  this 
unless  you  have  compelled  the  transportation  corporations  to  keep  honest 
uni'"orm  accounts?  How^  can  you  guarantee  that  you  have  honest  cap- 
italization honest  uni^'orm  accounts  unless  you  have  full  publicity?  The 
negative  conceded  that  all  these  things,  capitalization,  accounting  and 
publicity  should  be  controlled  not  by  the  states  but  by  the  federal  gov- 
ernment alone.  Thev  therefore  conceded  that  the  federal  government 
alone  could  control  rates  because  they  placed  in  the  hands  of  the  federal 
government  the  control  of  everything  necessary  for  the  adequate  control 
of  rates.  They  should  then  never  have  attacked  my  colleagues  argument 
on  rates. 

What  then  is  the  total  efl'ect  of  the  gentlemen's  concessions?  They 
conceded  incorporation;  hence  they  conceded  rates,  and  therefore  they 
conceded  every  point  advanced  by  the  affirmative  so  far  in  this  de- 
bate, and  everything  necessary  for  the  affirmative  to  advance  in  order 
to  prove  its  case.  We  contend  and  the  gentlemen  agree  that  we  niust 
have  exclusive  federal  control  of  rate  regulation  and  incorporation,  or 
in  other  words  of  all  transportation  corporations  doing  interstate  busi- 
ness. 

Let  me  now  show  the  effect  upon  the  negative  argument  of  the  other 
two  concessions  of  the  gentlemen:  first  they  agreed  with  us  that  eighty- 
five  per  cent,  six-sevenths  of  the  total  business  was  interstate  business 
exclusively  controlled  by  the  federal  government,  and  that  the  gentle- 
men had  no  fault  to  find  with  the  way  that  eighty-five  per  cent  was  be- 
ing controlled  and  that  they  thought  that  the  interstate  commerce  com- 

14 


mission  is  a  very  efficient  body.  Then  with  utter  disregard  for  consist- 
ency the  gentlemen  told  you  that  exclusive  federal  control  would  result 
in  excessive  centralization  of  power  in  th?  hands  of  the  federal  govern- 
ment, would  greatly  increase  corruption  would  overwhelm  the  commission 
with  work,  and  result  in  the  establishment  of  a  gigantic  political  ma- 
chine ana  the  appointment  of  an  army  of  officials. 

Ladies  and  gentlemen  just  consider  the  absi;rdity  of  these  charges 
in  the  face  of  the  gentlemen's  own  admissions.  When  the  gentlemen 
conceded  that  the  interstate  commerce  commission  which  controls  six- 
sevenths  of  the  business  today  was  very  efficient  and  that  the  change  to 
exclusive  federal  control  meant  merely  the  addition  of  the  remaining 
one-seventh  of  state  Vjusiness  they  admittejt  that  none  of  these  things 
existed  today;  and  let  nie  here  call  your  attention  to  the  fact  that  no- 
where in  their  argument  have  they  even  lireathed  the  ob\iously  alisurd 
charge  that  these  tilings  were  so.  But  now  they  contend  that  the  addi- 
tion of  one-seventh  more  business  is  going  to  cause  these  great  and  over- 
whelming evils.  Ladies  and  gentlemen,  how  can  the  addition  of  a  mere 
one-seventh  to  the  existing  power  of  the  federal  government  result  in 
excessive  centralization,  overwork  the  interstate  commerce  commis- 
sion cause  wholesale  corruption,  and  cau.se  the  aj)]iointmeni  of  an  army 
of  ofiicials?  All  of  which,  as  I  said  before  the  gentlemen  conceded  does 
not  exist  today.  Their  entire  contention  is  evidently  unfounded  either 
in  fact  or  theory. 

The  final  contention  of  the  gentlemen  was  equally  un^'oimdrd.  They 
declare  that  taking  this  one-seventh  from  the  states  would  take  govern- 
ment from  the  states  and  place  it  in  the  hands  of  the  federal  government, 
take  the  government  out  of  the  hands  of  the  people  and  cause  them  to 
lose  interest  in  the  problem.  By  this  the  gentlemen  seem  to  insinuate 
that  we  have  a  state  government  by  the  yieojjle  and  a  federal  governmi-nt 
not  by  the  people.  Ladies  and  gentlemen,  was  Abraham  Lincoln  alto- 
gether wrong  w^hen  he  spoke  of  a  federal  government,  by.  of  and  for  the 
people?  You  all  know^  that  he  was  not.  You  all  know  that  the  federal 
government  is  as  much  by  and  for  the  people  as  the  state  governments 
and  that  the  change  we  propose  is  merely  taking  the  power  <>ut  of  one 
of  the  people's  hands  and  putting  it  into  the  other. 

Let  me  summarize  the  affirmative  case.  Existing  transportation 
control  isn't  and  can't  be  made  adecjuate.  Exclusive  federal  control 
alone  will  be  adequate.  Controlling  trans])ortation  servants  by  forty- 
seven  masters  doesn't  and  can't  succeed.  Adequate  control  demands  a 
single  master,  the  federal  government. 

First  incorporation  must  be  adequately  controlled  'ilicre  must  be 
honest  capitalization;  honest  uniform  accounting,  and  full  jniblicity. 
Todav  transportation  corporations  incorporate  under  the  ])oorest  of 
forty-six  state  systems  competing  to  permit  corporations  to  prey  upon 
other  states.  Xor  is  there  any  relief.  If  every  state  except  Arizona, 
for  instance,  had  uniform,  perfect,  incorporation  laws.  Arizona  could 
continue  creating  corpor^itions  doing  anything  anywhere,  solemnlv  guar- 
anteeing uncontrolled  directors,  capitalization,  accounting  and  ])ublicity. 
For  less  than  a  suit  of  clothes  costs.  Arizona  sells  its  honor  and  the  Na- 
tional weKare,  and  no  power  but  federal  corporation  can  prevent  her. 

Aroused  public  opinion  demands  that  federal  incorporation  remove 
these  abuses.  Federal  incorporation  means  incorporation,  not  in  char- 
ter granting  states,  but  under  the  federal  government  alone.  Corpora- 
tions could  choose  not  the  poorest  state  law  but  the  best  federal  law 
possible.  Capitalization  will  be  based  not  upon  the  cupidity  of  dis- 
honest promoting  charter  granting  states  permit,  but  upon  actual 
proved  value.  Arizona  corporation  accounts  encoura.ge  public  fraud, 
deception  and  extortion.  Federal  corporations  must  keej)  honest  uni- 
form   accounts   examined    like   national   banks.      Lastly,    a   Connecticut 

15 


charter  cruarantees  absolute  secrecy,  a  federal  charter  absolute  publicity. 
Adequate  control,  therefore,   demands  federal  incorporation. 

Next  existing  rate  control  isn't  and  can't  be  made  adequate.  Ade- 
quate control  demands  federal  control.  Forty-seven  inharmonious  con- 
flicting masters  attempting  rate  control  don't  and  can't  succeed.  Ade- 
quate control  demands  a  single  master,  the  federal  government. 

State  rate  control  is  inadequate  becavise  state  and  interstate  traffic 
can't  be  separated,  because  rates  are  interstate  not  local  in  effect,  and 
because  conflict  between  state  and  nation  and  between  state  and  state 
results.  Judicial  authorities  declare  that  the  separation  of  local  from 
interstate  traffic  is  impossible  and  undesirable.  State  railroad  commis- 
sions admit  that  changing  purely  local  rates,  as  Minneapolis  to  Mankato, 
directlv  affects  hundreds  of  interstate  points.  Today  conflict  exists  be- 
tween state  and  nation  and  between  state  and  state.  Minnesota's  and 
a  dozen  other  purely  local  rate  laws  are  enjoined  and  ineffective  because 
interstate,  not  local,  in  their  effect  hence  violating  the  constitution  and 
interfering  with  the  rights  of  other  states.  California  typifies  state  con- 
flict by  refusing  to  prevent  local  rebate  discriminations  helpiiig  her  but 
hurting  other  states. 

State  rate  regulation  can't  give  relief.  It  isn't  and  can't  be  made 
adequate.  The  states  can't  and  don't  desire  to  treat  rates  as  interstate 
and  not  local.  There  is  no  power  to  force  them.  Federal  rate  control 
alone  will  be  adequate.  The  federal  government  alone  treats  rates  as 
interstate,  not  local,  in  effect;  alone  disregards  state  lines  and  looks  to 
the  welfare  of  the  nation;  alone  can  protect  every  shipper  everywhere 
and  adequately  control  every  transportation  corporation  everywhere. 
While  today  scarcely  half  of  the  states  make  any  effort  to  prevent  ex- 
tortionate rates  personal  and  local  discrimination  and  undue  preference, 
the  federal  government  has  laws  enforced  thruout  the  union  which  do 
prevent  these  things.  In  conclusion,  ladies  and  gentleinen,  let  me  again 
call-  your  attention  to  the  fact  that  the  negative  have  conceded  every 
one  of  these  things,  so  that  at  the  present  time  the  affirmative  case 
stands  untouched,  just  as  the  affirmative  made  it. 


Third  Negative — Mr.  William  R.   King 

At  the  very  outset  my  colleagues  defined  our  position  as  one  en- 
tirely agreeable  to  extensive  powers  for  the  Interstate  Commerce  Com- 
mission in  its  own  sphere,  that  is,  interstate  commerce.  But  we  main- 
tain that  there  are  certain  local  matters  inseparable  from  the  business 
as  a  whole  which  should  be  left  according  to  the  dual  theory  of  govern- 
ment to  the  states  and  we  therefore  drew  the  line  on  exclusive  federal 
control  of  all  railways  as  covered  by  the  term  interstate  carriers. 

My  colleagues  then  proceeded  to  show:  1.  That  exclusive  federal 
control  is  wrong  in  principle  and  contrary  to  precedent  in  that  it  deprives 
the  state  governments  of  their  just  powers  over  local  business.  2.  That 
federal  control  is  inexpedient,  for  (a)  it  would  remove  government  from 
the  hands. of  the  people  to  a  commission  appointed  at  Washington,  thus 
reversing  the  method  of  original  legislation  Ijy  the  people,  (b)  It  would 
increase  corrvtption  (1)  by  killing  the  interest  of  the  people  in  their  prob- 
lems, the  interest  which  supports  honesty  in  both  state  and  national 
governments.  (2)  By  centralizing  the  point  of  attack  for  the  railroads, 
thus  giving  them  power  to  control  the  government  instead  of  the  govern- 
ment controling  them,  fc)  It  would  disturb  the  "equilibrium  of  our 
vast  industrial  system,  paralyze  industry  and  seriously  imperil  the  eco- 
nomic conditions  of  the  country. 

And  now  in  addition  to  being  contrary  to  principle  and  inexpedient 
we  maintain  that  exclusive  federal  control  of  all  railways  is  impractica- 

16 


ble.  First,  because  it  would  not  be  put  into  effective  operation?  Why. 
Great  opposing  interests  and  the  magnitude  of  national  legislation  makes 
our  government  at  Washington  unduly  conservative.  DeToqueville. 
Hamilton  and  Bryce.  the  three  recognized  authorities  on  our  svstem  of 
government  all  agree  that  this  is  its  main  fault,  The  historv  of  railroad 
legislation  is  concrete  evidence  of  the  same  class.  The  records  of  con- 
gress for  twenty  years  are  of  attempts  to  create  an  interstate  commerce 
commission  of  adequate  power  and  even  then  they  only  partially  suc- 
ceeded. 

Compare  the  law  that  was  finally  passed  with  some  of  the  state  laws 
at  the  same  time.  The  state  laws  of  Minnesota,  Iowa,  and  Nebraska 
contain  provisions  for  the  handling  of  injunction  cases  in  a  s])ecitied 
local  court.  Has  the  national  law  any  such  provision  ?  Xo.  A  restrain- 
ing order  on  a  ruling  of  your  Minnesota  commission  can  and  has  been 
repeatedly  issued  by  judges  in  Rhode  Island  and  New  Jersey.  The  state 
laws  of  Nebraska.  Iowa.  Minnesota  and  a  number  of  other  states  provide 
for  action  on  the  part  of  the  commission  without  complaint,  the  same  as 
tho  formal  complaint  has  been  filed.  This  is  the  reform  begun  as  are 
all  other  reforms,  with  the  states.  .  The  national  law  plainlv  specified 
that  all  action  must  be  upon  formally  filed  petition.  And  who  are  the 
petitioners?  The  reports  of  the  commission  show  that  7F>'",  of  the  com- 
plaints are  by  associations.  It  is  out  of  the  question  for  the  individual 
to  reach  the  national  commission. 

Such  are  the  relative  merits  of  our  state  laws  on  railroads  and  the 
notoriously  inadequate  and  conservative  legislation  of  the  federal  gov- 
ernment. If  congress  can  under  present  conditions  pass  such  an  inade- 
quate law.  what  would  it  do  if  the  control  of  local  interests  were  added 
to  its  powers  (for  this  is  a  local  question,  remember — interstate  business 
under  either  system  remaining  under  the  contnjl  of  the  Interstate  Com- 
merce Commission).  Imagine  the  log  rolling,  the  wire  j)ulling  and  sec- 
tional strife  that  would  go  on  in  congress  when  legislating  on  local  mat- 
ters. And  yet  if  you  will  separate  the  country  north  of  Iowa  and  east 
of  the  Mississi])pi  you  have  a  territory  that  can  control  both  houses  of 
congress  and  under  exclusive  control  of  the  railroads,  the  east  would  be 
able  to  control  the  interests  and  solve  to  their  satisfaction  the  problems 
that  are  located  out  here  in  the  west.  If  it  took  eighteen  years  to  get  a 
conimission  with  powers  only  partially  adequate  to  control  interstate 
commerce,  how  long  would  it  take  to  get  a  law  for  the  control  of  all 
railroads  that  would  satisfy  all  sections  of  the  country? 

And  do  you  imagine  you.  can  reverse  the  system  of  controlling  in- 
ternal commerce  all  in  an  instant?  There  is  a  wide  difference  between 
giving  the  federal  government  a  power  to  control  the  railroads  and  the 
legislation  of  that  power  into  real  active  life.  Therefore  the  theoretical 
scheme  proposed  by  the  affirmative  for  controlling  the  railways  at  the 
hands  of  the  national  government  would  not  be  effectively  enforced. 
Their  plan  is  iinpracticable. 

We  have  now  shown  (1)  that  exclusive  federal  control  is  contrary 
to  principle;  (2)  inexpedient;  (3)  impr'Clicnble  Now  wc  nsi  teJ  from 
the  very  outset  that  in  order  to  win  this  debate,  the  aflirmative  must 
prove  that  the  evils  in  the  present  system  are  inherent.  Have  thev  done 
so?  They  point  out  four  main  evils:  first,  conflicts  of  authority,  includ- 
ing car  congestion  and  time  schedules.  Second,  excessive  and  vmefjual 
rates.  Third,  service.  Fourth,  overcapitalization.  Let  us  examine 
these  in  turn  and  see  whether  it  is  not  within  the  bounds  of  possibility 
at  least  for  the  state  and  national  government  working  together  to  solve 
these  probleins. 

First,  conflict  of  authoritv.  The  affirmative  suggests  that  one  state 
cannot  secure  cars  enough  in  times  of  freight  congestion.  But  this 
matter  is  already  under  the  control  of  the  interstate  commerce  commis- 
sion; all  that  is  needed  is  increased  powers  for  that  commission.      But 

17 


the  addition  of  the  control  of  intrastate  commerce  would  not  in  the  least 
be  necessary  to  cure  the  evil.  vSuch  difficulties  are  hut  incidental.  They 
can  be  remedied  by  coo])cration  anions^  the  states.  What  means  the 
state  commissioner's  national  organization,  organized  expressly  to  co- 
operate on  uniform  legislation  ?  What  means  the  national  meeting  of 
Attorneys  General  that  met  a  few  months  ago  for  the  purpose  of  getting 
together  on  these  problems?  A  dozen  state  commissions  already  have 
power  of  conferring  with  each  other  in  the  making  of  joint  rates.  So 
much  for  evil  number  one. 

livil  number  two,  high  rates.  The  federal  commission  now  has  a 
fair  amount  of  power  over  matters  of  discrimination.  We  admit  that 
this  should  be  increased,  but  we  do  not  admit  that  the  additional  control 
of  intrastate  commerce  will  in  any  way  be  necessary  to  solve  the  probletn. 
And  as  to  the  lowering  of  fares,  which  has  shown  the  most  ability,  the 
national  government  or  the  state  government?  Fifteen  states  have  re- 
duced their  rates.  Not  a  single  rate  has  been  reduced  by  the  national 
government  in  the  entire  twenty  years  of  its  existence.  You  contend 
that  the  states  will  be  successful  and  with  the  history  of  your  national 
commission  before  you  still  argue  that  exclusive  federal  control  will  solve 
the  problem  to  the. satisfaction  of  all  local  interests. 

Evil  number  three  service.  The  affirmative  contends  that  unified 
control  is  necessary  to  secure  adequate  service,  and  vet  the  railroads 
divide  the  administration  of  their  own  business  into  distinct  and  inde- 
pendent districts  of  much  less  extent  than  most  of  our  states.  And  who 
is  more  familiar  with  the  service  needed  for  Minnesota,  vour  railroad 
and  warehouse  commission  or  some  official  down  at  Washington,  neither 
directly  appointed  by  you  nor  subject  to  your  expulsion? 

Evil  number  four,  overcapitalization.  And  here  the  affirmative 
makes  their  final  stand  asserting  that  because  a  few  railroads  are  over- 
capitalized, that  therefore  we  must  have  federal  control.  That  the  na- 
tional government  must  control  because  the  railroads  refuse  to  give  the 
states  the  figures.  .  We  of  the  negative  submit  in  all  fairness  to  this  audi- 
ence that  it  is  reasonable  to  presume  that  the  states  can  secure  sufficient 
evidence  to  make  a  just  estiinate  of  the  true  value  of  these  properties 
Iving  within  their  boundaries  if  they  so  desire.  The  railroads  can  furnish 
the  facts  if  the  people  will  only  assert  their  rights  and  demand  the  truth. 
And  that  is  just  what  they  are  doing. 

But  what  if  the  railroads  are  overcapitalized,  is  that  a  major  evil? 
■The  state  commissions  make  their  rates  practically  independent  of  the 
fictitious  capitalization,  depending  largely  upon  their  own  valuation  of 
the  property  and  their  estimate  of  their  earning  capacity.  And  if  the 
national  government  undertook  to  handle  this  problem,  see  what  that 
would  mean?  A  national  incorporation  law,  that  sooner  or  later,  would 
result  in  depriving  the  states  of  the  control  of  every  corporation.  This 
would  mean  the  entire  revision  of  our  corporation  law,  would  deprive 
the  state  of  their  own  creatures,  would  wipe  out  state  lines  and  leave  us 
with  onlv  the  central  government,  a  government  by  commission. 

Ladies  and  gentlemen,  we  insist  once  more  as  we  have  all  thru  this 
debate  that  the  affimiative  has  failed  to  prove  that  the  evils  in  the  present 
system  are  inherent  and  that  the  step  which  they  propose  is  necessary. 
Not  one  of  the  evils  in  our  present  system  cannot  as  well  be  cured  by  the 
states,  the  national  government  cooperating,  as  by  exclusive 
federal  control.  And  they  are  being  taken  up  by  the  states  to 
the  great  dismay  of  the  railroads.  New  York,  Michigan,  Wisconsin, 
Illinois,  Minnesota,  Iowa,  Nebraska,  Texas,  and  last  and  most  active  of 
all  is  the  new  state  of  Oklahoma. 

When  we  stop  to  consider  the  treinendous  impetus  that  has  been 
received  along  every  line  of  industrial  activity  thru  the  developinent  of 
the  railroad,  the  ease  and  rapidity  of  communication  between  different 
parts  of  the  covmtry,  before  changing  the  theory  of  control  of  such  a 

18 


vast  industrv,  we  should  give  some  \vei;j;ht  at  least  to  the  principles  of 
government  and  the  precedent  for  such  a  move.  Take  a  vote  of  the 
citizens  of  your  state  of  Minnesota  or  any  other  state,  ask  them  whether 
they  would  remove  government  now  residing  close  home  to  a  commis- 
sion onlv  indirectly  their  agent.  You  know  what  they  would  say.  Their 
whole  interests  in  the  problem  would  be  destroyed.  And  just  at  the 
time  when  the  people  were  making  Uicir  interest  in  the  problem  felt  as 
thev  can  thru  their  state  legislatures — just  at  the  time  when  the  advan- 
tages of  home  made  government  are  being  plainly  recognized.  You 
would  let  the  railroads  bv  their  cry  of  unified  control  inlluence  you  to 
plunge  into  a  reform  that  means  the  entire  destruction  on  the  rights  of 
your  state.  Xo.  The  exclusive  federal  control  of  railroads  is  unm-ces- 
sary,  is  contrary  to  principle,  is  inexpedient,  it  is  impracticable. 


First  Negative  Rebutt.^l — Mu.  (.'i.vdk  (".  Mi  \Viii\.\  i:v 
Mr.  Chairman,  Ladies  and  Gentlemen: 

The  affirmative  savs  S.'iT^  of  the  business  is  interstate  business, 
while  onlv  liiO^  is  intrastate  business,  and  they  ask  us  why  we  are  afraid 
to  give  up  this  lo'vj  of  the  business  and  transfer  it  to  the  federal  gov- 
ernment. Mv  colleague  has  shown  you  that  the  federal  government 
has  not  been  able  to  take  care  of  the  So^y  Why  trans^'er  the  other  In','  ? 
We  admit  that  85Ti  of  the  business  is  interstate  business  yet  we  main- 
tain that  if  the  states  control  their  15%  of  the  business  as  they  should 
control  it.  they  will  influence  not  only  the  15*^;  but  half  and  more  than 
half  of  the  business.  For  instance,  just  carefully  consider  what  it  means 
when  we  say  that  15%  of  the  business  is  purely  state  business.  That 
means  that  the  business  starts  and  ends  within  the  state.  Yet  you  know 
that  there  is  much  business  which  starts  ujxm  the  border  of  one  state 
and  goes  across  into  another  state,  and  yet  this  is  known  as  interstate 
busiriess  while  it  is  purely  local  short  haul  business  and  controlled  by 
the  local  rates  passed  by  the  states.  Hence  you  have  '.'AV,  .  i>robably 
40%.,  possibly  50%  of  the  business  indirectly  if  not  directly  under  the 
control  of  the  state  legislature.  \'ow.  as  you  know  the  state  lowers  the 
local  rates.  For  instance  Nebraska  has  lowered  its  rate  from  three  cents 
to  two;  Iowa  has  lowered  its  rate  from  three  cents  to  two  and  Minnesota 
has  lowered  its  rate  from  three  to  two  cents.  What  does  this  mean'  It 
means  that  by  each  state  asserting  its  rights  the  interstate  rate  will 
necessarily  be  lowered  to  two  cents.  Now  if  a  two  cent  fare  from  Lin- 
coln to  Chicago  is  reasonable,  why  has  not  the  Interstate  Commerce 
Commission  put  it  into  force  instead  of  relying  upon  the  state  govern- 
ments to  do  it?  If  the  states  have  been  doing  as  they  should  in  lower- 
ing these  local  rates,  why  should  we  transfer  this  15'^";  from  the  state  to 
the  national  government?  The  National  government  cannot  even  con- 
trol the  85 <^/;  ,  but  relies  upon  the  state  commission.  This  influence 
which  the  states  have  over  interstate  commerce  is  merelv  a  moral  influ- 
ence. Suppose  your  state  has  the  right  to  lower  its  local  rates  by  add- 
ing these  local  rates  j'ou  will  get  not  more  than  a  reasonable  interstate 
rate. 

Our  opponents  say  that  by  lowering  one  rate  we  necessarily  influence 
the  rates  all  over  the  country.  But.  gentlemen,  there  can't  be  drastic 
legislation.  Are  the  aflirmative  afraid  that  the  states  are  going  wild, 
that  thev  will  pass  drastic  laws,  robbing  the  railroads  of  their  pro])erty 
by  passing  confiscatory  laws?  This  would  be  denving  that  the  railroads 
can  get  jiistice  in  any  of  the  courts  of  the  land.  It  would  be  .saying  that 
the  railroads  were  wronged  and  could  not  get  justice  in  any  of  the  state 
courts,  nor  in  our  federal  nor  our  supreme  courts.  To  say  this  would 
be  to  fly  in  the  face  of  our  whole  judiciary  system.     Therefore  since  it 

19 


cannot  be  the  railroads  that  are  afraid  that  their  rates  will  be  lowered 
below  a  reasonable  rate,  it  must  necessarily  be  that  they  are  afraid  that 
the  rate  will  be  lowered  to  a  reasonable  rate.  This  is  why  the  railroads- 
are  so  opposed  to  state  regulation. 

The  affirmative  say  that  this  is  a  national  problem.  But  is  the  ques- 
tion of  local  rates  a  national  problem  ?  Are  your  people  in  Minnesota 
directly  interested  in  ascertaining  the  local  rate  in  the  Southern  states? 
Are  we  interested  in  learning  the  local  rate  on  flour  from  San  Francisco 
to  Los  Angeles?  No.  These  are  purely  local  problems  hut  yoti  people 
in  Minnesota  and  the  people  in  every  other  state  in  this  country  are 
deeply  interested  in  their  own  local  rates  and  service.  Hence,  in  con- 
clusion we  wish  to  retain  control  of  intrastate  business  because  local 
rates  are  directly  affected  by  it.  But  our  opponents  say  that  intrastate 
and  interstate  business  are  inseparable.      But  are  they  inseparable? 


First  Affirmative  Rebutt.\l — Mr.  Harold  C.  Deering 

Honorable  Judges,  Ladies  and  Gentlemen: 

My  colleagues  pointed  out  that  the  interstate  commerce  commis- 
sion, that  reputable  authority  of  authorities,  which  has  investigated  the 
problem  can  see  that  local  rates  and  interstate  rates  are  interdependent 
and  cannot  be  separated.  The  gentlemen  ask  us  why  do  the  railroads 
favor  exclusive  federal  control?  The  railroads  favor  it  because  they 
.appreciate  the  fact  that  dual  control  is  not  giving  them  a  control  which 
is  just.  They  appreciate — whether  the  gentlemen  appreciate  it  or  not — 
that  there  are  evils,  that  there  is  a  problem  and  that  it  is  only  thru  ex- 
clusive federal  control  that  a  solution  can  be  reached.  Let  me  read  an 
interview  with  President  Mellen :  "It  is  better  that  regulation  should 
be  by  one  authority  than  by  many;  that  it  be  uniform  and  efficient, 
rather  than  neglected  or  ineffective  as  at  the  present  time." 

Now  let  us  take  up  again  our  constructive  argument  where  the  nega- 
tive say  we  said  there  are  four  inherent  evils.  We  said  nothing  of  high 
and  discriminatory  rates  or  poor  service.  I  trust  that  you  will  remember 
that  we  said  nothing  of  either  of  these  two.  The  gentlemen  ha^■e  been 
setting  up  and  shooting  at  wooden  Indians  and  missing  them. 

The  other  two  points  are  conflicts  and  overcapitalization.  We 
pointed  out  that  inherent  conflicts  will  exist  between  the  states,  and  be- 
tween the  states  and  federal  government.  We  pointed  out  that  over- 
capitalization dtjes  exist,  because  the  states  today  do  not  endeavor  to 
control  the  capitalization  of  corporations.  They  are  overcapitalized 
today,  and  capitalization  is  the  basis  of  valuation  upon  which  rates  are 
made.  This  problem  of  overcapitalization  goes  right  to  the  heart  of  the 
problem,  and  as  long  as  the  gentletnen  can  see  that  the  federal  govern- 
ment should  have  control  over  this  matter  of  incorporation,  thru  which 
this  matter  of  capitalization  and  these  other  matters  are  being  controlled, 
and  as  the  matters  go  hand  in  hand  and  cannot  be  separated,  they  have 
conceded  that  the  federal  government  should  have  exclusive  control  of 
rates.  Let  me  read  what  the  senate  committee  investigating  the  inatter 
said:  "The  stock  and  bonded  indebtedness  of  the  roads  largely  exceeds 
the  actual  value  and  cost  of  their  construction  or  their  present  value  and 
that  unreasonable  rates  are  charged  in  the  effort  to  pay  dividends  on 
watered  stock  and  interest  on  bonds  improperly  issued." 

Therefore  as  incorporation  and  rate  regulation  go  together,  and 
cannot  be  separated.  In-  conceding  incorporation  thev  concede  this  other 
matter  of  rate  legislation.  The  gentlemen  ask  us  where  we  are  to  draw 
the  line.  We  don't  have  to  tell  the  gentlemen  where,  why  or  how.  We 
maintain  that  there  is  a  transportation  problem,  and  that  it  can  be  solved 
only  thru  exclusive  federal  control.     This  has  not  been  denied. 

20 


The  gentlemen  make  a  statement  as  to  the  impracticability  of  fed- 
eral control.  The  constitutionality  in  this  debate  is  granted.  This  be- 
ing the  case  we  may  believe  that  the  subject  is  a  practicable  one,  and 
that  a  constitutional  law  may  be  enacted.  And  furthermore  as  to  its 
being  impracticable,  we  would  ask  the  gentlemen  if  the  federal  govern- 
ment has  not  been  perfectly  capable  of  controlling  the  post  office,  the 
national  banks,  the  revenue  system,  and  other  matters  of  like  nature; 
and,  if  so.  why  can  it  not  control  eflliciently  local  commerce?  The  reve- 
nue office  goes  into  every  locality,  as  does  the  post  office,  and  exercises 
its  duties  as  efficiently  and  expeditiously  as  is  necessary  for  the  welfare 
of  the  locality. 

Xow  the  whole  argument  of  the  gentlemen  has  been  outlined  this 
evening  on  the  principle  that  it  is  contrary  to  the  fundamental  idea  of 
our  government  to  centralize.  We  ]iointed  out,  and  the  gentlemen  admit 
that  today  the  federal  go\ernment  controls  eighty-fi\'e  jier  cent  of  the 
transportation  business.  How  then,  is  the  additional  fifteen  per  cent 
going  to  centralize  matters  greatly?  Further,  the  gentlemen  ]iointed  out 
that  there  would  be  a  great  increase  of  corruption  in  the  federal  govern- 
ment for  the  same  reason.  How,  if  today  the  federal  government  con- 
trols eighty-five  per  cent,  is  the  addition  of  the  additional  fifteen  per  cent 
going  to  increase  corruption  greatly? 


Second  Negative  Rebuttal — Mr.  Lawrence  J.  Weaver 

Ladies  and  Gentlemen.  Honorable  Judges: 

The  gentlemen  of  Minnesota  have  based  their  whole  case  on  the 
idea  that  the  states  are  conflicting;  that  there  is  an  antagonism  between 
the  states,  and  it  is  impossible  for  us  to  get  any  uniform  law.  What  are 
the  railroads  afraid  of?  Are  they  afraid  of  having  their  rates  lowered 
below  a  reasonable  basis?  If  so,  they  are  saying  that  they  can't  get 
justice  from  the  courts.  If  a  rate  is  lowered  below  what  it  should  be 
the  railroads  have  a  right  to  appeal  to  the  courts.  In  short,  ladies  and 
gentlemen,  you  are  taking  one  of  two  things  for  granted:  Either  the 
authority  of  the  affirmative  that  the  states  cannot  get  just  rates,  or  that 
the  railroads  cannot  get  justice  from  the  courts,  which  is  ridiculous. 
Therefore  it  comes  down  to  this:  The  railroads  must  be  afraid  that 
their  rates  are  going  to  be  reduced  to  a  reasonable  basis,  and  that,  ladies 
and  gentlemen,  is  exactly  and  precisely  the  reason  why  we  favor  state 
legislation  combined  with  federal  control. 

As  to  the  history  of  state  regulation,  it  does  not  reveal  particularly 
drastic  laws;  is  the  recent  law  of  passenger  rates  too  drastic?  Are  the 
recent  rate  bills  adopted  bv  manv  states  of  the  United  States  too  drastic? 
Plainlv  no.  Is  it  conflicting  with  other  states?  Xo.  And.  furthermore, 
if  the'people  of  Minnesota  wish  to  regulate  their  local  service,  and  ask 
the  state  legislature  to  pass  a  law  requiring  all  trains  coming  to  the  Union 
Depot,  of  Minneapolis,  to  arrive  on  schedule  time,  is  that  too  drastic? 
Plainlv  not.  Therefore,  ladies  and  gentlemen,  the  state  laws  are  not  too 
drastic,  and  the  states  are  not  conflicting  with  each  other  when  they  sim- 
ply regulate  their  railroads  as  they  should  be  regulated. 

Xow,  the  opposition  says  that  we  will  not  have  to  increase  the  num- 
ber of  government  oflicials  bv  adding  the  other  one-seventh  of  the  intra- 
state business.  He  says  that  it  doesn't  mean  that  there  will  be  increased 
political  corruption.  I  pointed  out  before  why  we  would  have  more  cor- 
ruption. For  the  first  reason,  the  railroads  would  have  their  point  of 
attack  centralized,  directly  centralized  to  a  small  body  of  national  com- 
missioners; and.  it  will  create  a  great  political  machine;  and,  thirdly,  it 
will  kill  your  interest  in  this  problem.  The  people  of  Minnesota  <>r  any 
other  state  are  not  going  to  acknowledge  that  their  laws  in  respect  to  the 

21 


regulation  of  the  railroads  are  fruitless,  and  that  they  will  have  to  trans- 
fer the  control  to  Washington  where  it  is  out  of  sight  and  reach.  The 
gentlemen  have  said  that  the  business  is  not  separable.  I  shall  only  at- 
tempt to  cite  to  you  the  decision  in  the  famous  case  of  Smythe  vs.  Ames. 

The  affirmative  says  that  local  rates  will  atifect  the  whole  business, 
that  the  state  of  Minnesota  can  affect  the  whole  railway  system.  But, 
ladies  and  gentlemen,  1  wish  you  to  consider  this  question.  Why  should 
your  local  shipper  who  ships  from  one  point  in  Minnesota  to  another 
point  in  Minnesota  support  the  thru  shipj)er?  Why  should  he,  for  in- 
stance, pay  $1.50  to  ship  some  article  one  hundred  fifty  or  two  hundred 
miles,  and  allow  the  thru  shipper  to  ship  the  same  distance  at  half  that 
amount.  In  short,  you  are  killing  competition.  You  are  supporting 
these  thru  shippers,  giving  them  a  lower  rate.  Do  you  want  to  do  this? 
If  the  rates  are  not  fair,  why  cannot  all  the  states  combine  to  make  them 
fair?  We  do  not  see  any  danger  of  friction  between  national  and  state 
govemnient.     There  has  been  none  in  the  past. 

Now  we  have  shown  that  exclusive  federal  control  is  contrary  to 
the  fundainental  principles  of  our  democratic  government;  that  it  is  in- 
expedient and  furthermore  that  it  is  impractical.  We  have  shown  that 
the  evils  of  high  rates,  poor  service,  overcapitalization  and  discrimination 
are  not  inherent  in  the  dual  system.  Is  the  gain  worth  the  cost?  We 
think  it  polic}^  to  retain  the  good  features  the  present  system  possesses- 
and  to  make  only  those  changes  which  will  allow  the  dual  sovereignty  of 
the  state  and  nation  to  remain. 


Second  Affirmative  Rebuttal — Mr.  Algernon  O.  Colburn 

Honorable  Judges,  Ladies  and  Gentlemen: 

The  gentlemen  ask  us  who  will  give  the  best  service,  the  interstate 
commerce  commission  or  your  own  commission?  The  body  which  is 
owned  b}^  the  railroads  or  the  body  which  rules  the  railroads?  Jame- 
Manahan,  attorney  for  the  Minnesota  Shippers  and  Receivers  associa. 
tion,  said  our  local  commission  is  owned  body  and  soul  by  James  J.  Hills 

Let  us  go  over  again  the  several  points  under  discussion.  The  gen- 
tlemen have  admitted  the  point  of  incorporation.  This  being  disposed 
of,  there  only  remains  the  matter  of  rate  regulation.  We  said  that  the 
present  system  of  making  rates  is  based  on  the  assuinption  that  local 
rates  were  local  in  effect  merely,  but  they  are  not  only  local  in  their  ef- 
fect but  interstate  in  effect;  the  state  cominissioners  themselves  in  Na- 
tional Convention  assembled,  admitted  this.  Then  we  said  that  the 
present  system  was  inadequate,  and  caused  a  conflict  between  state  and 
federal  authorities.  Judson  in  his  work  cites  a  hundred  cases  going  to 
the  Supreme  Court  to  decide  questions  relating  to  conflicts  between  state 
and  federal  authority.  If  we  had  exclusive  federal  control  these  cases 
would  never  have  arisen.  The  problem  would  be  solved  for  all  tiine, 
whereas  now  these  cases  of  conflicts  constantly  come  up.  For  that 
reason  alone,  if  for  no  other,  we  ought  to  have  exclusive  federal  control. 

Then  we  showed  you  that  the  present  system  resulted  in  conflict 
between  a  state  and  its  neighboring  states  with  respect  to  rate  regulation. 
We  showed  you  that  a  state  discriminates  in  favor  of  its  own  shippers 
and  interests  to  the  detriment  of  the  shippers  and  interests  of  neighbor- 
ing states. 

The  gentlemen  of  the  negative  have  said  that  courts  of  justice  will 
prevent  rates  being  too  high  or  too  low.  We  said  nothing  about  rates 
being  too  high  or  too  low.  Discriminations  are  efl^ected  by  other  ineans 
than  bv  making  of  rates.  They  are  effected  by  the  granting  of  rebates, 
by  underbilling,  by  overbilling,  by  allowing  fictitious  claims  and  scores 
of  other  ways.     Tlie  gentlemen  have  not  attempted  to  dispute    us    on 

22 


these  points.  It  is  by  these  means  that  the  shi]ipers  of  one  state  get  an 
unfair  advantage  over  the  shippers  of  another  state. 

The  state  "railroad  commissioners  themselves,  the  gentlemen  who 
are  attempting  to  make  the  present  system  of  railroad  control  work, 
have  made'  recommendations  which  amount  to  exclusive  federal  con- 
trol. Here  are  their  recommendations  in  and  out  of  their  natifnial  con- 
ventions: (1)  That  the  United  States  government  should  pass  a  law 
making  classification  of  freight  uniform  thruout  the  United  States.  (2) 
That  there  should  be  a  uniform  system  of  accounting.  {',i)  That  there 
should  be  a  uniform  method  of  making  rate  schedules.  (4)  That  the 
state  commissions  be  made  the  agents  of  the  Interstate  t'omnierce  Com- 
mission. If  these  recommendations  were  made  the  law  we  would  have 
exclusive  federal  control  of  transportation  corporations  doing  interstate 
business. 

We  should  have  exclusive  federal  rale  regulation,  then,  because  the 
present  system  is  inadequate,  never  can  be  made  adequate,  and  because 
exclusive  federal  control,  alone,  means  adequate  control. 


Third  Negative  Rebuttal — Mr.  William  R.  King 
Honorable  Judges,  Ladies  and  Gentlemen: 

The  negative  deny  that  their  case  will  rest  upon  argument  from  au- 
thority. There  are  authorities  upon  authorities  in  a  cjuestion  of  this 
kind,  and  the  mere  fact  that  it  is  selected  for  debate  shows  that  we  can 
find  sufficient  evidence  by  authorities  just  as  good,  just  as  important, 
on  the  other  side  of  the  question.  But  this  is  not  a  debate  upon  authori- 
ties. The  arguments  delivered  from  this  platfoqn  are  the  arguments  to 
count  in  this  debate  and  not  the  arguments  of  the  men  who  jirobably 
do  not  know  as  much  about  the  question  as  we  do.  Our  opponents  quote 
some  authoritv  as  saying  that  your  Minnesota  Commission  is  owned  by 
James  J.  Hill,' but  ladies  and  gentlemen,  I  wish  to  assure  you  that  the 
Nebraska  Commission  is  owned  by  no  one.  And  if  your  Minnesota 
commission  is  owned  by  railroads,  it  is  to  your  shame. 

The  affirmative  long  before  they  can  win  their  case,  must  sliow  that 
the  evils  are  inherent.  We  have  shown  that  not  a  single  evil  is  inlierent 
and  that  every  one  can.  and  is  being  solved  by  the  people  of  the  various 
states.  Is  the  change,  then,  necessary?  The  affinnative  say  that  they 
want  the  exclusive  federal  control  in  order  to  have  unity.  We  have 
shown  that  this  unity  will  result  in  dangerous  centralization  and  that  it 
is  inexpedient;  it  means  the  substitution  of  long-range  government  fcjr 
home-made  government,  the  fundamental  ])rinciple  upon  which  this 
democratic  government  was  founded. 

But  come  gentlemen,  debate  with  us  a  practical  question.  We  do 
not  want. to  theorize  on  a  solution  for  this  grave  railroad  prf)blem.  This 
debate  is  upon  the  question  of  whether  we  can  get  a  plan  in  operation. 
We.  of  the  negative,  argue  upon  a  conservative  plan;  the  gentlemen  of 
the  affirmative  argue  for  radicalism,  for  a  theory.  We  have  shown  their 
plan  is  impracticable. 

We  have  shown  then  in  the  first  place  that  it  is  contrary  to  princi- 
ple; we  have  shown  in  the  second  place  that  it  is  inexpedient  for  it  sub- 
stitutes long-range  government  for  home-made  government  that  it  is 
inexpedient  because  it  increases  corruption  bv  centralizing  the  point  of 
attack,  and  that  it  is  inexpedient  because  it  kills  the  interest  of  the 
people  at  home.  In  the  third  {)lace  we  have  shown  that  exclusive  federal 
control  is  impracticable  because  it  never  could  be  enforced.  And  final- 
ly we  maintain  that  the  affirmative  fails  to  show  that  the  evils  arc  in- 
herent and  that  the  change  is  necessary. 

23 


Third  Affirmative  Rebuttal — Mr.  Stanley  B.  Hotck 

Honorable  Judges,  Ladies  and  Gentlemen: 

The  negative  deny  that  their  case  will  rest  upon  argument  from 
authority.  They  declare  that  they  know  as  much  about  this  question 
as  the  authorities  do.  We  of  the  affimiative  have  let  our  case  thruout 
the  entire  debate  rest  on  argument  backed  in  every  case  by  good  sound 
authority.  We  do  not  believe  that  we  know  as  much  about  this  ques- 
tion as  the  authorities.  This  gives  me  the  opportunity  to  emphasize 
the  fact  that  the  negative  have  not  backed  up  a  single  one  of  their  or- 
guments  in  this  debate  either  with  fact  or  authority.  The  affirmative 
has  never  failed  to  do  so,  and  moreover  the  affirmative  in  a  large  number 
of  cases  have  quoted  the  men  who  should  have  supported  the  negative, 
I  mean  the  state  railroad  commissioners,  the  men  who  are  trying  to 
make  the  dual  system  succeed. 

The  gentlemen  of  the  negative  have  told  you  that  it  would  be  im- 
possible to  get  congress  to  pass  the  laws  necessary  to  secure  federal 
control.  They  believe  that  it  would  take  a  large  aniount  of  legislation 
and  the  fear  for  the  welfare  of  the  countrv  during  the  period  between 
the  ending  of  dual  control  and  the  beginning  of  exclusive  federal  control. 
This  objection  of  the  gentlemen  is  a  purely  theoretical  objection,  not  a 
practical  one.  The  change  which  the  affirmative  proposes  this  evening 
is  not  a  radical  or  sweeping  change  at  all.  As  we  pointed  out  again 
and  again  and  as  the  gentlemen  have  agreed  the  change  will  merelv  in- 
crease the  power  of  the  federal  government  one-seventh.  To  make,  this 
change  there  need  be  no  great  amount  of  legislation  as  the  gentlemen 
insist.  Congress  need  not  enact  a  single  new  law,  it  need  merely  extend 
the  laws  which  now  serve  to  adequately  control  six-sevenths  of  the  busi- 
ness to  include  the  remaining  one-seventh.  That  law  could  go  into  force 
instantly  and  there  wovild  then  be  no  occasion  for  the  fears  of  the  gentlemen. 

The  other  objections  of  our  opponents  have  been  taken  up  and  an- 
swered by  my  colleagues.  1  wish  now  to  briefly  summarize  the  arguments 
in  this  debate.  My  first  colleague  showed  you  that  the  existing  svstem 
of  state  control  of  incorporation  wasn't  and  couldn't  be  made  adequate. 
He  showed  that  exclusive  federal  control  alone  would  be  adequate.  The 
question  of  incorporation  he  showed  covered  all  questions  of  control  of 
capitalization,  future  stock  issues,  accounting  and  publicity.  The  nega- 
tive conceded  the  necessity  of  the  federal  government  controlling  these 
things.  My  second  colleague  showed  that  e\'en  intrastate  rates  were  in- 
terstate, not  local  in  effect.  He  showed  the  interdependence  of  all  rates, 
the  impossibility  and  undesirability  of  separating  state  from  interstate 
traffic.  He  showed  that  the  existing  system  resulted  in  conflict  between 
state  and  state  and  between  state  a'nd'nation.  He  quoted  the  National 
Convention  of  State  Railroad  Commissioners  in  proof  of  these  points. 
The  affirmative  then  showed  how  the  negative  when  they  conceded 
the  control  of  incorporation  to  the  federal  government  also  conceded  the 
control  of  rates  to  the  federal  government  because  the\^  conceded  with 
incorporation  the  control  of  all  those  things  necessary  for  the  adequate 
control  of  rates.     T'.e  gentlemen  have  rever  ^;1  tempted  to  denv  this. 

The  affirmative  then  showed  how  the  negative's  admission  that  the 
change  only  affected  one-seventh  of  the  business  and  that  the  addition 
of  one-seventh  to  the  existing  power  of  the  federal  government  could  not 
result  in  excessive  centralization;  could  not  increase  corruption;  could 
not  result  in  the  appointment  of  an  army  of  officials  or  the  creation  of  a 
^eat  political  machine  as  the  negati\  e  insisted.  Neither  could  it  greatly 
overburden  the  Interstate  Commerce  Commission.  The  gentlemen's 
charges  were  evidently  absurd  upon  their  face.  Here  again'the  gentle- 
men said  not  one  word  in  denial  of  these  things.  Neither  did  they  pro- 
duce any  evidence  in  proof  of  their  charges. 

We  therefore  have  shown  and  the  gentlemen  have  admitted  that  the 
existing  system  of  controlling  transportation  corporations  isn't  and 
can't  be  made  adequate,  and  that  exclusive  federal  control  alone  will 
give  adequate  control. 


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